Hundreds Of Billions Of Taxes Owed – GOP Goes After Federal Employees

Congress is again fighting over the budget with Republicans now demanding cuts in federal employee benefits. Is this really about the budget? Or is it about destroying government? Meanwhile hundreds of billions of taxes owed by corporations remain uncollected.

The recent Republican shutdown of the government ended with the can being kicked down the road, and the budget still in sequester and unresolved. The temporary funding runs out mid-January, and negotiators are trying to come up with a compromise. But Republicans insist that only cuts will be allowed, and that the sequester spending levels are the new normal.

Federal employees are bracing for the possibility of paying more toward their retirement benefits as political leaders slowly renew budget discussions with an eye toward deficit reduction. House Republicans and President Obama have both proposed the change in order to achieve savings.

Also, according to the American Federation of Government Employees (AFGE),

To replace sequestration, House leaders have proposed cuts to federal employees’ pensions and benefits the elderly, the sick and the poor receive through Social Security and Medicare. It’s important to note that cutting Social Security benefits directly affects federal employees.

Meanwhile, what about privatized contractors? From the WaPo story: “Patty Murray (D-Wash.) has pitched a plan that would leave federal-employee retirement contributions untouched while adjusting contractor compensation to achieve savings.”

Of course, the effect of this is to hurt morale of government workers. And the propaganda that accompanies this push blames government workers, says they are overpaid, says they have “lavish” pensions, etc. This is an attack on the workers, intended to further damage the American government that Republicans despise.

Senator Tim Kaine (D-VA) is asking the budget committee to leave federal employees alone, writing that, “federal workers already have contributed to fiscal belt-tightening through a three-year civilian pay freeze and furloughs resulting from sequestration and the 16-day government shutdown in October.” Also,

In his letter, Kaine cited an October Senate Armed Services hearing with Defense Department officials whom he said “unequivocally reiterated that sequestration and furloughs have had a negative toll on morale for civilian and non-civilian federal employees.” Witnesses testified that “vital workers are questioning their value and considering the private sector as a result of an uncertain future,” Kaine wrote.

Uncollected Taxes

You may have heard that multinational corporations are holding somewhere in the range of $2 trillion outside of the country, to avoid paying the taxes they owe when they bring the money back to the US. This is because of a loophole called “deferral.” Profits made outside the US are not taxed if the company doesn’t repatriate the money.

Because of this loophole companies move jobs, factories and profit centers outside the country, and companies that do not are left at a disadvantage. The taxes due on this money are somewhere upwards of $700 billion. The amount held outside the country grows every year — along with the number of jobs, factories and profit centers companies move to take advantage of this.

Corporate tax breaks will total $108 billion in FY2013 – more than 1.5 times what the U.S. government spends on education funding. Between 2007 and 2013, the revenue lost from U.S. corporations deferring taxes on income earned abroad rose 200%, going from $14 billion to $42 billion.

All tax breaks for individuals will exceed $1 trillion this year, with about 17% of the biggest individual tax breaks going to the top 1% of earners. In fact, many individual tax breaks disproportionately benefit wealthy households.

This would bring in hundreds of billions revenue as well as more than $1 trillion toward investment and/or shareholders. Republicans refuse to address it, preferring instead to go after government employees, food stamps, etc.

The answer is first to be aware that there is a huge pool of money available in uncollected revenue. Second, do not fall for the anti-government propaganda and blame government or government employees for the problems. They are just going to work and doing their jobs. And, finally, call your Representative and Senators and let them know you want the loopholes closed, not cuts in pensions of working people.

About Dave Johnson

Dave has more than 20 years of technology industry experience. His earlier career included technical positions, including video game design at Atari and Imagic. He was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.